Friday, January 16, 2009

The Credit Crunch Strikes

Here is a message that I received from Mint (I will post about my new love affair with Mint later).

Hi there,
The interest rate on your XXXXX credit card has increased by 7.59%. As of January 14, your old rate of 11.4% is now 18.99%. You may want to investigate ... Here is their number: 1-800-XXX-XXXX.

The Mint Team

Can you believe it, a whopping 7.59 percentage point increase. For goodness sake that is a 66% rate increase! Are they crazy? Is it me or has the Fed continued to lower the rates, which technically should have translated to a lower rate for borrowers. I thought the bailout money (and my credit card is with a recipient of those funds) was supposed to help liquidity in the credit markets. How are you helping liquidity when you're making money more expensive to borrowers? How are you increasing liquidity when you're putting the squeeze on credit card holders?

Oh well, my rant is partially in vain, but not really. It is the principle of the matter. Thankfully I saw the need to get out of credit card debt a few years ago so I'm not financially impacted by the rate increase. However, I loathe the idea that the credit card companies are universally raising their rates when the Fed is cutting them some slack AND giving them my hard earned dollars. For the record, I have never been late on a payment and I do use the card but I pay it off each month. As the old saying goes, something in the milk ain't clean!

Oh and guess what, the trifling bank has yet to send me any notification of the increase. Had I not registered with
Mint, I would not have known, at least not this soon.

Ah crap, I don't know why I'm trying to be all discreet, the offender is Citibank. There, I said it. Has your rate increased on your credit cards?


Sharon Rose said...

Hi there-Like you, i thankfully don't have any credit card debt, one of my cards that is not in use is a whopping 30 odd % interest-so pleased its a zero balance!

jpkittie said...

Yep - my citi bank went up last fall --- never was late (I even was making them money! I carried a balance!) So when we got the notice - I called & cancelled the card... so I am paying it off with the interest past. I think it is crap that they change the rates... I get it - I chose to use your card & borrow X amount of dollars at X amount of interest --- when I use the card, I know that interst - you should not be able to change it! Just another reason why we are all working to get out of debt & stay out of debt.

MoneyMateKate said...

I got hit in the first wave of this nonsense from Citibank back around Thanksgiving. The thing that kills me is the "13.99% above prime, to be no less than 19.99%", so that we can't even catch a tiny break when interest rates are as low as they are now.

The banks' liquidity is improved - yours isn't, and it certainly has an "anti-stimulus" effect on the retail sector. The whole bailout thing was a very selfish CYA move on their part, and I wish they'd just gone under like they deserved. And I say that as someone who isn't suffering from their rate hikes (balance-free for over a decade).

D.C. 2 said...

What tha h#$#?! That is garbage. I can't believe they did that to you. And they expect you to not cancel them. I hope you don't have a large balance with them. I have two Citibank cards. I would scream if they reniged (?sp) on my rate

Shtinkykat said...

Citibank's finally nabbed you too, eh? Thank heavens I don't carry any balances on their cards. But good job on having no cc debt!

Money Funk said...

Wow! ya, a lot of them are doing that because there is a new regulation going into effect to help consumers... and that is CC companies cannot raise interest rates on previous balances. Hence, they are all doing it before it goes into effect. I wish I knew when that is!

I looked at Mint. Maybe I should consider using it.

Ms. MoneyChat said...

sharon rose - 30%, oh my goodness. yes, it's a good thing that you have a zero balance!

jpk: yep, citi has definitely made me frown at them. it's just crazy that they're raising rates at such an alarming rate. i'm thinking they probably want customers to default. christine has a good point, the cc companies are probably trying to lock in high rates before the new legislation is enacted.

moneymatekate: thanks for stopping by! i agree with you, this has been the best case of CYA that i've ever seen.

D.C 2: luckily i have a zero balance with citi. i really want to cancel the card but i don't want to open any new credit. i hadn't opened any new credit since i purchased my home in 2003. the citi card is the only one i have. trust me, i want to can them really bad but not bad enough to get a new credit card.

shtinkykat - yep, they got me too;-).

christine - good point on the new laws. yes, you should check out mint. everyone should check out mint!!! i'm still learning new things about it everyday (it's only been about 2 weeks since i signed up). i want to blog about it but i'm going to wait until i get my arms around all the many wonderful features.